Did you know that from July 1st 2017 we saw some significant changes to superannuation? These changes if not carefully looked at could mean you end up paying extra tax.

The changes at a glance are:

Concessional contributions

Concessional contributions are contributions made into your SMSF that are included in the SMSF’s assessable income. These contributions are taxed in your SMSF at a ‘concessional’ rate of 15%, which is often referred to as ‘contributions tax’.

The most common types of concessional contributions are employer contributions, such as super guarantee and salary sacriﬁce contributions. Concessional contributions also include personal contributions made by the member for which the member claims an income tax deduction.

Concessional contributions are subject to a yearly cap.

From 1 July 2017, the general concessional contributions cap was changed from $35,000 to $25,000 for all individuals regardless of age.

Non-concessional contributions

Generally, non-concessional contributions are contributions made into your SMSF that are not included in the SMSF’s assessable income. The most common type is personal contributions made by the member for which no income tax deduction is claimed.

Non-concessional contributions also include excess concessional contributions for the ﬁnancial year.

They do not include:

super co-contributions

structured settlements and orders for personal injury

capital gains tax (CGT) related payments that the member has validly elected to exclude from their non-concessional contributions.

From 1 July 2017, the government lowered the annual non-concessional contributions cap to $100,000. They will also introduce a new constraint so individuals with a balance of $1.6 million or more will no longer be eligible to make non-concessional contributions.

If you are younger than 65 years old, you may be able to make non-concessional contributions of up to three times the annual non-concessional contributions cap in a single year.

If eligible, when you make contributions greater than the annual cap, you automatically gain access to future year caps. This is known as the ‘bring forward’ option.

From 1 July 2017, the bring forward amount and period also depends on your total super balance on 30 June of the year before the financial year in which the contributions that trigger the bring forward were made.

For 2017–18 onwards, to access the non-concessional bring forward arrangement, you must:

be younger than 65 years old for one day during the triggering year (the first year)

contribute more than the annual cap

have a total super balance less than $1.5 million on 30 June of the previous year.

For 2017–18 onwards, the remaining cap amount for year 2 or 3 of a bring forward arrangement is reduced to zero if the total super balance is greater than $1.6 million on 30 June of the previous financial year.